Choosing the right type of trust for your goals
South Carolina residents have a variety of trust options for estate planning purposes. Trusts offer several benefits, such as asset protection, tax savings, and control over how and when assets are distributed. However, selecting the right trust depends on your specific goals and needs.
One common type of trust is the revocable living trust. The grantor or creator retains control over assets during their lifetime and can make changes or dissolve the trust. Upon the grantor’s passing, assets in the trust are distributed according to the trust document, avoiding the probate process.
Another option is an irrevocable trust, which cannot be altered or dissolved once established. This type of trust is often used for estate tax planning as the assets are removed from the grantor’s estate and not subject to estate taxes. However, the grantor must surrender control over the assets in the trust.
Charitable trusts also offer the ability to donate assets to a charitable organization while receiving tax benefits. Charitable trusts can be either revocable or irrevocable, depending on the grantor’s wishes.
A marital trust, also known as an “A” trust, is commonly used in estate planning for married couples. This trust holds assets for the benefit of both spouses during their lifetimes. It provides for the distribution of those assets to their beneficiaries upon death. One of the main benefits of a marital trust is that it allows for the efficient transfer of assets from the first spouse to die to the surviving spouse without the need for probate.
Life insurance trusts
A life insurance trust is a type of trust that holds the ownership of life insurance policies and is used for estate planning purposes. The trust is created to own and manage the policies, and the death benefit from the policies is paid to the trust’s beneficiaries.
Choosing the right trust
When choosing a trust, consider your goals and circumstances. Different types of trusts offer different benefits, so select the one that aligns with your objectives. It’s also important to regularly review and update the trust to ensure it continues to meet your needs and goals over time.